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SM&CR:ARE YOU READY?Preparing for the implementation of the Senior Managers and Certification Regime for FCA solo-regulated firms
2SM&CR: Are You Ready?
The Senior Managers and Certification Regime (SM&CR) introduces major changes to the regulation of people working within the financial services sector.
What is SM&CR
It will come into force for FCA solo-regulated firms on 9 December 2019 and will replace the Approved Persons Regime (APR).
The purpose of SM&CR is to reduce harm to consumers and strengthen the integrity of the financial markets.
The new regime aims to:
• increase personal accountability;• improve conduct at all levels; and• ensure that firms and staff understand
(and can show) who does what
There are three key parts to SM&CR. These are:
• The Senior Managers Regime• The Certification Regime• Conduct Rules
These changes introduce new regulatory requirements for firms. These requirements will vary depending on a firm’s size and type.
and why do you need to take action?
3SM&CR: Are You Ready?
If you haven’t already, now is the time to start planning how your firm will implement SM&CR.
• Do you know whether you are an Enhanced, Core or Limited Scope SM&CR firm?
• Do you know what is required of you?• Do you have an implementation plan in
place?
Things you need to think about:
• Who are the Senior Managers in your firm?• Do they each have a Statement of
Responsibilities?• Have you assigned prescribed
responsibilities appropriately?• How does your firm discharge its ‘Duty of
Responsibility’?
What are YOU doing about
SM&CR?
You will also need to:
• Identify the people or business units within the firm who have a significant impact for your business and your customers
• Review your recruitment policies and procedures to ensure compliance with the new regime (e.g. regulatory references, the need for criminal records checks)
• Have an effective training and competence regime in place
• Demonstrate that your people are fit and proper for their roles
If you are an Enhanced firm, you must also:
• Ensure every business area has a Senior Manager with overall responsibility for its activities
• Put together a responsibilities map to set out your firm’s management arrangements
• Make sure that handover arrangements are in place when responsibility for a Senior Management Function is transferred from one person to another
Firms need to start preparations now. Don’t leave it too late!
4SM&CR: Are You Ready?
The Conduct Rules
SM&CR introduces two tiers of Conduct Rules, which apply to all firms and branches.
• Individual Conduct Rules – these are general rules that apply to all financial services staff increasing individual accountability
Rule
You must act with integrity1
You must act with due care, skill and diligence2
You must be open and cooperative with the FCA, the PRA and other regulators3
You must observe proper standards of market conduct5
You must pay due regard to the interests of customers and treat them fairly4
Non-Executive Directors
a
a
a
a
a
Senior Managers
a
a
a
a
a
Employees
a
a
a
a
a
Rule
You must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively
SC1
You must take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system
SC2
You must take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibility effectively
SC3
You must disclose appropriately any information of which the FCA or PRA would reasonably expect notice
SC4
Non-Executive Directors
r
r
r
a
Senior Managers
a
a
a
a
Employees
r
r
r
r
• Senior Manager Conduct Rules – these are additional rules that apply to Senior Managers
5SM&CR: Are You Ready?
A Healthy Culture
Building the Right Culture
SM&CR is about improving conduct and creating and maintaining a healthy culture in the financial services sector. Having the ‘right’ culture in your organisation will help you ensure compliance. Positive values and behaviours should be embedded throughout your organisation right the way from the board, to the latest inductee.
To be ready for SM&CR you should:
• Review your corporate governance processes
• Make sure your organisational structure and reporting lines are ‘fit for purpose’
• Review recruitment policies and procedures
• Reflect on leadership and management styles and organisational culture
• Consider issues of diversity and inclusion in the workplace
It’s also important that your people understand the standards required of them and have the right support within the firm.
You should work towards ensuring a transparent culture, with high standards, in which employees feel safe to speak up, knowing their concerns will be listened to.
Embedding the Right Culture
SM&CR is an opportunity for your organisation to evaluate, document and embed the right culture across your organisation. It requires creative team thinking throughout your organisation and strategic planning to help you embed:
• your conduct risk; • your culture;• your training and development;• your human resources;• your customer satisfaction; and • your communication strategies
6SM&CR: Are You Ready?
Organisations with the right culture will be starting to plan for SM&CR now.
RWA can guide firms through every element of SM&CR. Our diverse team of specialists has designed a range of innovative solutions to suit firms of all sizes, whatever their needs.
Our products and services include:
• SM&CR Audit• SM&CR e-Learning, via the Aviva
Development Zone online learning platform• Implementation Plan Development• Coaching, Mentoring and Training• HR Support • Compliance Support• Workshops and Masterclasses
What can RWA do for you?
SM&CR AuditRWA is offering a high-level audit, which will help your firm map out what it needs to do to ensure compliance with the new regime. The audit will engage with your firm and help you to better understand where you are now and what you need to do to prepare for December 2019. The audit is free, with no on-going obligation.
If you would like to find out more, please contact the team at RWA:
Call: 01604 709 509Email: [email protected]
7SM&CR: Are You Ready?
Insight is a free website and newsletter that provides business news, industry updates and thought leadership from RWA. Sign up to our mailing list to receive our weekly e-newsletter, which will keep you up-to-date with our latest articles.
In the run up to SM&CR implementation, we will publish at least one SM&CR-related article per week, focusing on the regulatory aspects of SM&CR as well as exploring how the regime aims to improve conduct and culture in the financial services sector.
Recent Insight articles have included:
If you’d like to find out more, you can also follow us on LinkedIn for regular updates.
Sign up to Insight
8SM&CR: Are You Ready?
About RWA
Contact Us
Established for over 25 years in the insurance sector, RWA is one of the leading business consultancies in the UK.
If you’d like to know more about how we can help you prepare for SM&CR, please get in touch.
Call: 01604 709 509Email: [email protected]
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Our team of specialists has helped thousands of individuals and businesses to achieve their organisational goals, maintain regulatory compliance and effectively manage and develop their people via HR support, e-learning solutions and training.
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Whether you are looking for consultancy solutions, compliance support or training and development services, RWA’s experienced consultants are here to help.
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